FEBRUARY 8, 2013
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Statewide News Coverage
Additional Oversight for Oversight Agency: Five-Member CFPB Leadership Plan
U.S. Sen. Jerry Moran introduced a bill that would replace the director of the Consumer Financial Protection Bureau with a five-person panel and bring the bureau under the regular appropriations process.
  Senators to Block Cordray Nomination
43 Republican senators told President Barack Obama in a letter that they would continue to oppose confirmation of the CFPB director until the bureau's structure is reformed, saying its sole director has too much power.

  What’s Up for Credit Unions?
Charter Enhancement Bills on the Horizon

CUNA is enlisting congressional support for several credit union charter enhancement bills that are expected to be unveiled soon, dealing with issues such as member business lending and supplemental capital.

  Congressional Hearing on Tax Reform:
Charitable Deductions

The U.S. House Ways and Means Committee scheduled for next week a hearing on itemized charitable deductions, part of the panel's broad look at comprehensive tax reform.

  GAO Releases Study Analyzing Effects of Bank Closures
The General Accounting Office released a study of bank closures between 2008 and 2011, as part of an effort to help policymakers and the public understand factors that contributed to the closures.

  Bills, Hearings and Issues in the Georgia Legislature
The Georgia Legislature took up several issues of potential interest to credit unions, including the use of electronic benefit transfer cards at ATMs, foreclosure law, property covenants and more.

  Superseding the FI Priority Lien Authority
One bill has been introduced in the state Senate, and one is expected to be introduced in the House, addressing the issue of past-due condo and homeowners' association fees in the foreclosure process.

  Building Influence for All Credit Unions
A recent reception hosted by credit union leaders for the Georgia General Assembly offered an opportunity to build relationships with elected officials, spread the credit union message and build influence.

  March Madness?
A recent NCUA letter to federal credit unions explained the agency's decision to increase operating fees for credit unions with more than $1 million in assets and to eliminate such fees for credit unions with assets of $1 million or less.

  And the 2014 Senate Race Is Out of the Gate!
U.S. Rep. Paul Broun filed paperwork declaring his intention to run next year for the U.S. Senate seat currently held by Saxby Chambliss, who plans to retire, but there are several other potential candidates who may challenge Broun.

  Lt. Governor Appoints Credit Union CEO Phyllis Cochran
to the Commission on Women

Lt. Gov. Casey Cagle appointed Phyllis Cochran, CEO of Augusta VAH FCU, to serve on the state's Commission on Women, which advises the governor and state agencies on matters involving women's issues.

Big BrotherAdditional Oversight for Oversight Agency:
Five-Member CFPB Leadership Plan

U.S Sen. Jerry Moran (R-Kansas) introduced a bill (S. 205) that would replace the director's position at the Consumer Financial Protection Bureau with a five-person panel. The bill mirrors one Moran offered in the last Congress, and CUNA backs the concept of a multi-member directors panel but maintains it should go beyond the five-member model. They suggest a CFPB board should include seats statutorily designated for industry representatives, including a state or federal credit union regulator, and possibly a state consumer agency representative.

CUNA maintains that industry representation would enhance the quality of regulation promulgated by the CFPB by ensuring both the consumer perspective as well as the industry perspective is represented in the decision-making process. The Moran bill also would bring the CFPB under the regular appropriations process; currently the bureau receives around $400 million in funding directly from the Federal Reserve. 

Many proponents of the changes carried in Moran's bill argue that they would make the CFPB more accountable, and provide additional checks and balances. A number of GOP lawmakers vowed last year to block confirmation of a director unless those changes were made. In fact, 43 Senate Republicans sent a letter to President Obama recently to recommit their vow (see related article below) to continue to block confirmation of any nominee for CFPB director. That opposition, in large part led to President Obama's recess appointment last year of Richard Cordray as CFPB director.

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CordraySenators to Block Cordray Nomination

U.S. Senate Minority Leader Mitch McConnell (R-Kentucky) and 42 other Republican senators on February 1st told President Barack Obama that they will continue to block the confirmation of any nominee for Consumer Financial Protection Bureau director until the bureau’s structure is reformed. In the letter the senators said that “As presently organized, the CFPB is insulated from congressional oversight of its actions and its budget. Far too much power is vested in the sole CFPB director without any meaningful checks and balances.” The letter is similar to a May 2011 letter sent by 44 GOP senators to the President shortly before he nominated Richard Cordray to be the bureau’s first director.

The senators urged the adoption of reforms that would replace the bureau’s director with a board, subject the agency to the congressional appropriations process, and establish a safety and soundness check for the prudential regulators over CFPB regulations. President Obama made Cordray the CFPB director through a recess appointment on January 4, 2012 after GOP senators had threatened for months to block his confirmation if those reforms were not made. On January 24th the President said he would re-nominate Cordray to continue as CFPB director, and the next day a federal appeals court ruled that similar recess appointments the President made to the National Labor Relations Board were unconstitutional, casting doubt on the validity of Cordray’s appointment and giving GOP senators added leverage to push their demands for CFPB structural changes.

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U.S. Capitol sunsetWhat’s Up for Credit Unions?
Charter Enhancement Bills on the Horizon

Credit union charter enhancement legislation, such as member business lending and supplemental capital bills, are expected to be unveiled in the coming weeks, and CUNA staff is setting the table for these bills by seeking congressional support. CUNA has discussed the upcoming bills in recent meetings with Senate Banking Committee members, and has emphasized the bipartisan appeal of both bills during those meetings; reaching out to senators to garner greater appeal through possible changes.

U.S. Rep. Ed Royce (R-California) is preparing the MBL legislation, and U.S. Rep. Peter King (R-New York) is readying the supplementary capital bill. Both pieces of legislation will be virtually identical to bills that were introduced last year; however, there may be some changes to portions of the supplemental capital bill when introduced that address transparency and disclosures.

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Congressional Hearing on Tax Reform: Charitable Deductions

TaxesThe tax policy-writing House Ways and Means Committee has scheduled a hearing next week on itemized charitable deductions. The hearing is part of what will be a broad look by the committee at the subject of comprehensive tax reform. Credit unions are not anticipated to be any part of the focus at this upcoming hearing; however, CUNA will be watching this hearing closely as it could shed light on how the committee intends to evaluate tax provisions going forward.
Preserving the credit union tax status is always a top priority. Credit unions’ 2013 federal legislative agenda focuses on:

  1. preserving the credit union tax status,
  2. reducing regulatory burden,
  3. engaging in housing finance reform, and
  4. advancing credit union charter enhancements, such as increased member business lending authority and supplemental capital.

The hearing will take place on Thursday, February 14th starting at 9:30 a.m. (ET).

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BankGAO Releases Study Analyzing Effects of Bank Closures

In January, the General Accounting Office released its study of bank closures that occurred between 2008 and 2011. During that time, 414 insured U.S. banks were closed. The study was mandated as part of legislation (H.R. 2056) sponsored by Georgia U.S. Rep. Lynn Westmoreland (R-3) and co-sponsored by fellow Georgia U.S. Rep. David Scott (D-13).

The study is intended to help policymakers and the public understand factors that contributed to the closures, the effects fair-value accounting may have played on those banks' condition, the FDIC's use of loss-share arrangements, and the effects of closures on local communities. The findings include that:

  • Failures of the smaller banks (those with less than $1 billion in assets) were largely driven by credit losses on commercial real estate (CRE) loans.
  • The failed banks also had often pursued aggressive growth strategies using nontraditional, riskier funding sources and exhibited weak underwriting and credit administration practices.
  • Fair-value accounting did not appear to be a major contributor to closures, and it had some insightful findings about the effects of loss-share agreements, resulting market concentrations and effects on state economies.

Click here for a summary and here for the full report.

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Gold DomeBills, Hearings and Issues
in the Georgia Legislature

The state Legislature is on its 14th day of the 40 day session, and is quickly working through several bills of note (and there are several more issues yet to arise!). The House Banks and Banking Committee held their first meeting for organizational purposes on February 5th, and there were multiple hearings of interest to credit union issues in the House Judiciary Committee and others. Throughout the week there were issues of note addressed both in hearings and in the halls of the Capitol:

  • HB 181 by Rep. Kevin Cooke (R-Carrollton) seeks to prohibit Georgia-based ATMs from accepting electronic benefit transfer cards (EBTs) for public assistance purposes to be used to obtain cash. This issue of EBTs is also being addressed in HB 138 by Rep. Andy Welch (R-McDonough), which seeks to limit what can be purchased with EBT cards (such as prohibiting purchase of alcohol, tobacco and tattoos), but the prohibition also includes gift cards. One can only imagine the logistical nightmare and hefty compliance burden to require ATMs to differentiate on EBT cards, and the Government Influence Team will continue to address these bills to ensure that credit unions are not impacted.
  • This week the House Judiciary Committee held multiple hearings on HB 160 by Rep. Mike Jacobs (R-Brookhaven), which amends the state’s foreclosure registry standard for language consistency, and also seeks to ban recurring recording fees that run indefinitely with the land (recurring fees paid every time owners change hands). Of specific note to credit unions is not what the bill presently does, but what it could do, as it opens up sections of law relating to foreclosures and property fees (see related article below on priority liens).
  • HB 175 by Rep. Dustin Hightower (R-Carrollton) seeks to codify what is in case law regarding property covenants, stating that the covenants run with the land for 20 years. The Government Influence Team spoke to Rep. Hightower on his motivations for the bill, as there have been rumors of possible legislation that would prohibit changing covenants (even if the new owners of the subdivision are the majority owners of the land/homes). This issue has surfaced due to property owners of partially completed subdivisions being displeased when new homes are built that were not in the original size or aesthetic of the development. During the February 6th House Judiciary Subcommittee hearing it was moved forward without onerous amendments; however, the Government Influence Team addressed this issue with Committee Chair Rep. Mike Jacobs so that he would be aware that the bill may be viewed by some as a “vehicle” for this type of change.
  • This week the House Ways and Means Subcommittee held additional hearings on HB 80 by Rep. Tom Rice (R) to make technical corrections to the overhaul of the title fee/tag process in Georgia that the Legislature passed in 2012. Even while those technical corrections are being addressed, legislators continue to introduce bills to modify the title/tag fee process even further. HB 216 by Rep. Sheila Jones (D-Atlanta) was introduced this week to attempt to prohibit the title fee from applying to instances where there is a transfer of vehicle due to inheritance. These motor vehicle bills, all of them, are monitored closely.
  • Need to file a conveyance/lien on real property with the Superior Court? Rep. Tommy Benton (R-Jefferson) introduced a bill this week (HB 215) that, if passed, would instruct the clerk of court to not record the documents unless all fees and taxes due in connection with the filings are paid.

Georgia CapitolAnd as we are going to press the following are some of the new bills that have recently been introduced:

  • HB 234 by Rep. Lynn Smith (R-Newnan), which would require additional notice provisions in automatic renewals in contracts (but presently exempts financial institutions and subsidiaries of such).
  • SB 106 by Sen. Curt Thompson (D-Tucker), which seeks to require an appraisal prior foreclosure if a deficiency judgment is procured (and as such, ties the amount collected to the amount of the appraisal and debt owed).
  • SB 108 by Sen. Lester Jackson (D-Savannah), which would overhaul the current foreclosure process (notice provisions, timing, and creates penalties).

Next week the state Legislature will be in session Monday through Thursday, with multiple hearings on existing and upcoming issues. What is anticipated? The Government Influence Team should see draft language of a bill that would limit how deficiency judgments are procured in addition to the foreclosure, and there will likely be a bill that addresses interest rate disclosures. And of course, new bills are introduced every day! To learn more about the daily activity on the above bills and see others as they are introduced and assessed to protect all credit unions, please access the Georgia credit union legislative tracking site.

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State Rep. Alex Atwood
Superseding the FI Priority Lien Authority

The topic of foreclosures and the foreclosure process is often the root of the legislative issues at the statehouse for credit unions, and this year is no different. However, this year the proponents of several issues have been from the perspective of property associations, who seek opportunities to change the law to supersede the financial institution’s priority lien authority and require the new holder of a property post-foreclosure to pay unpaid condo or homeowners’ association fees. The first bill introduced on this issue is SB 56 by Sen. Jesse Stone (R-Waynesboro), which would require the purchaser of property in a foreclosure sale to pay potentially up to a year of unpaid condo or homeowners’ association assessments. In early discussions with Sen. Stone, he has indicated that he does not wish to make the process difficult for financial institutions and has not moved the issue forward as of press time.

In the House, Rep. Alex Atwood (R-Brunswick) has shared with the Government Influence Team that he will introduce a similar bill and asked the financial industry for input and possible common ground with the property association interests. Much work continues on this issue. In the meantime, the property association interests are looking at other avenues to insert their fee language (see related HB 160 above); at least one additional bill is anticipated. The Government Influence Team has addressed this issue with legislators, including Rep. Mike Jacobs (R-Brookhaven) who has shared that he is not in favor of adding past-due association fees to other parties in the event of a foreclosure. However, there are many legislators, several who are in leadership, that have expressed they “want to see a compromise” between financial institutions and the property association interests. Stay tuned!

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From left: Mike Mercer, GCUA; Rep. Greg Morris, Chairman of House Banks and Banking Committee; Cheryl Hill, and State Rep. Calvin Hill
Building Influence for All Credit Unions

The ability of credit unions to shape legislative issues is greatly strengthened when the elected official has a personal connection with the industry. Building this connection can be an easy task, but it takes personal interaction with the legislator in the district, at church, in civic and/or community organizations. And, these opportunities can be created! One such opportunity was held in conjunction with the February board meetings, as the credit union leaders hosted a legislative reception on February 5th for all members of the Georgia General Assembly. This reception provided the ideal window to build relationships, strengthen the credit union influence, and raise awareness of credit union issues. Statewide elected officials, senators and representatives alike, were able to connect with credit union individuals to learn more about what makes our industry unique.

The following day legislators remarked how much they appreciated the ability to get to know the credit union industry more deeply. Thank you to all of the board and committee members who engaged these elected officials; your involvement builds influence for all credit unions!

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NCUA logoMarch Madness?

Federal credit union operating fees is the topic of the NCUA’s most recent Letter to Federal Credit Union (13-FCU-01); the letter reminds of the agency's action in November that increased the fee for credit unions with more than $1 million by 0.24% and eliminated the fees for those with assets less than or equal to $1 million. Included with the letter is an NCUA chart intended to help a federal credit union calculate the exact dollar amount of its operating fee. The chart also includes the NCUA web link to the online calculator, and the letter also provides insight into the calculation method.

The letter states that federal credit unions with more than $1 million in assets will be sent an invoice for the operating fees in March. The operating fee will be based on assets reported Dec. 31, 2012. At the same time, all federally insured credit unions will receive notice of any amount needed to adjust their National Credit Union Share Insurance Fund capitalization deposit to 1% of insured shares. The NCUA will combine the operating fee and capitalization deposit adjustment into a single payment, and that payment is due April 30, 2013. The agency adds that for federal credit unions signed up to pay via Pay.Gov, no further action is required; payment will occur by April 30. All others must send payment according to the instructions included with the invoice. Questions regarding details for the letter should be directed to the NCUA's Office of the Chief Financial Officer at ocfomail@ncua.gov.

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Horse raceAnd the 2014 Senate Race
Is Out of the Gate!

U.S. Rep. Paul Broun (R-10) filed paperwork with the Federal Election Commission on February 6th to run for the seat presently occupied by U.S. Sen. Saxby Chambliss (R), who has announced that he will not seek re-election. Broun is one of the most conservative members of Congress and holds a strong libertarian streak.

Broun is the first candidate to enter the race ahead of what is expected to be a crowded primary on the Republican side. Other members of Georgia’s GOP congressional delegation also could jump into the race — even though a primary election is still 17 months away. The other possibilities still debating a run at the seat include U.S. Rep. Jack Kingston (R-1), U.S. Rep. Phil Gingrey (R-11) and U.S. Rep. Tom Price (R-6). It takes money to run even the smallest state race, much less a statewide U.S. Senate race. Curious about the balances of these possibilities? Here is how the potential Senate hopefuls reported their cash on hand as of Dec. 31, 2012:

  • U.S. Rep. Phil Gingrey, R-Marietta: $1.87 million
  • U.S. Rep. Tom Price, R-Roswell: $1.58 million
  • U.S. Rep. Jack Kingston, R-Savannah: $988,000
  • U.S. Rep. Paul Broun, R-Athens: $156,000
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Phyllis Cochran
Lt. Governor Appoints Credit Union CEO Phyllis Cochran
to the Commission on Women

Lt. Governor Casey Cagle recently announced that Phyllis Cochran, CEO of Augusta VAH FCU, has been appointed to serve on the Commission on Women. The Commission will be the body responsible for collecting and disseminating information regarding the role of women in the state of Georgia and the impact any state laws have on Georgia women. They consult and advise the Governor, state departments, agencies, boards or commissions on matters pertaining to women and will explore employment policies in the public and private sector and their impact on the wage-earning capacity of women. The commission’s purpose is to promote, encourage and provide advisory assistance to the state, local and community women’s professional, business and civic organizations. Our congratulations to Cochran for this appointment!

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